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Yahoo
6 days ago
- Business
- Yahoo
Why Are Cava Shares Falling Despite Strong Results, and What Does It Mean for Investors?
Cava once again saw tremendous same-store sales growth in its latest quarter. The company has a huge expansion opportunity still in front of it. It has all the ingredients to be the next Chipotle-type growth story. 10 stocks we like better than Cava Group › Despite being one of the fastest-growing restaurant concepts around, Cava Group's (NYSE: CAVA) stock has failed to gain any traction this year. This was evident once again after its stock slipped despite another strong showing from the fast-casual Mediterranean-themed restaurant operator when it reported its fiscal first-quarter results. The stock is now down around 14% in 2025, as of this writing. Let's dig into the company's fiscal Q1 results to see if investors should buy the dip in the stock. Cava's string of double-digit same-store sales growth continued in its fiscal Q1, which ended April 20. Its same-restaurant sales climbed 10.8%, with a 7.5% increase in guest traffic and a 3.3% rise in price and mix. That was just ahead of the 10.3% increase that analysts had projected, as compiled by StreetAccount. It also continued its strong streak of recent same-store sales results over the past four quarters. Metric Q2 2024 Q3 2024 Q4 2024 Q1 2025 Same-store sales growth 14.4% 18.1% 21.2% 10.8% Traffic 9.5% 12.9% 15.6% 7.5% Price and mix 4.9% 5.2% 5.6% 3.3% Data source: Cava Group earnings press releases. The introduction of grilled steak last summer was the catalyst for the company's strong same-store sales growth, and it said this past quarter that it was continuing to see customers add higher-priced items to its orders, such as pita chips and house-made juices. It called out strength across geographies and income brackets as well, noting that the company was benefiting from customers trading up from fast food as well as trading down from casual-dining restaurants. Its summer menu introductions this year will include chef-curated bowls and Hot Harissa Pita Chips, and it's testing new menu items such as chicken shawarma in select markets. It's also looking to help drive growth by adding a tiered structure to its loyalty program that will tailor benefits and look to increase customer engagement. Cava's overall revenue for the quarter climbed 28% year over year to $328.5 million. It opened 15 new locations in the quarter, bringing its total to 382 restaurants, an 18% year-over-year increase. It is now operating in 26 states after entering Indiana with plans to enter the new markets of Detroit and Pittsburgh later this year. Overall, it plans to open between 64 and 68 new locations in 2025. Its restaurant-level margins (RLMs) stayed steady at 25.1% in the quarter versus 25.2% a year ago. RLMs measure the profitability of restaurants before corporate costs and are an important metric in the industry. Cava's RLMs were just below the 26.2% that Chipotle Mexican Grill produced in Q1, showing how strong the company's operating performance is compared to one of the leaders in the industry. On the profitability front, Cava's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 35% year over year to $44.9 million. The company produced $38.6 million in operating cash flow in the quarter and free cash flow of $2.7 million. This demonstrates that Cava is able to expand its locations while living within its means, not taking any undue risks. Looking ahead, the company raised its 2025 adjusted EBITDA outlook, taking it from between $150 million and $157 million to a new range of $152 million to $159 million. Meanwhile, it maintained its forecast for same-store sales to increase by 6% to 8% with RLMs ranging from 24.8% to 25.2%. It implemented an approximate 1.7% price increase in early January and has no plans for additional increases. It said its exposure to tariffs is limited as the majority of its ingredients are domestically sourced or covered under existing contracts. Trading at a forward price-to-earnings (P/E) ratio of nearly 174 and a price-to-sales ratio of 9.4 based on 2025 analyst estimates, Cava stock is not cheap. And right now, valuation is the biggest risk to the stock, especially if consumer spending begins to slow. However, with fewer than 400 locations and its same-store sales booming, the company has a huge expansion opportunity in front of it. It's looking to reach at least 1,000 restaurants by 2032, which is nearly triple the number of locations it has today. Overall, Cava has all the ingredients of a highly successful emerging restaurant stock, with strong same-store sales, robust RLMs, attractive average unit volumes, and a long runway for expansion. As such, long-term investors can look to take a position in this strong story. Before you buy stock in Cava Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Cava Group wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $642,582!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $829,879!* Now, it's worth noting Stock Advisor's total average return is 975% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool recommends Cava Group and recommends the following options: short June 2025 $55 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy. Why Are Cava Shares Falling Despite Strong Results, and What Does It Mean for Investors? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Mayor
17-05-2025
- Business
- Business Mayor
Cava revenue beats estimates as Mediterranean chain reports double-digit same-store sales growth
Cava on Thursday reported better-than-expected sales in its latest fiscal quarter, shaking off the malaise the broader restaurant industry has felt as consumers have cut back on dining. The Mediterranean chain said its same-store sales grew 10.8% in the three months that ended April 20, lifted by traffic growth of 7.5%. Analysts surveyed by StreetAccount were projecting same-store sales growth of 10.3%. 'When we look at our consumers in the quarter, we saw an increase in premium attachment on higher priced items, like our pita chips or amazing housemade juices. We also saw that our per person average continued to increase, and then when we look at our results, there's positive traffic across all of our geographies, across all of our income cohorts, as well as the different formats of our restaurants and dayparts,' Chief Financial Officer Tricia Tolivar told CNBC. She added that diners have been trading up from fast food and down from casual-dining restaurants into Cava's bowls and pitas, a trend the company has seen for several quarters. Elsewhere in the restaurant industry, companies have been reporting very different behavior from consumers, although many companies' results did not include any time in April, when the industry's sales and traffic performance improved. Fast-casual rival Chipotle said its transactions fell 2.3% in the first quarter as consumers pulled back their spending in February, spooked by economic uncertainty. Sweetgreen reported its first quarterly same-store sales decline since it went public in 2021. McDonald's CEO Chris Kempczinski said fast-food industry data showed both low- and middle-income consumers spending less. The burger giant said U.S. same-store sales declined 3.6% for the first quarter. Despite the strong quarterly performance, Cava reiterated its same-store sales forecast, sticking with its projections of a 6% to 8% increase. The chain said last quarter that it is expecting slower growth in the back half of its fiscal 2025. The stock fell 5% in extended trading. As of Thursday's close, Cava shares have slid 11% so far this year, hurt by investor concerns over its conservative outlook for the fiscal year and the economic fallout from the Trump administration's tariffs. Here's what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG: Earnings per share: 22 cents. That may not compare with the 14 cents per share expected by LSEG. 22 cents. That may not compare with the 14 cents per share expected by LSEG. Revenue: $332 million vs. $327 million expected The company reported fiscal first-quarter net income of $25.71 million, or 22 cents per share, up from $13.99 million, or 12 cents per share, a year earlier. Cava reported an income tax benefit of $10.7 million related to stock-based compensation, which boosted its earnings this quarter. Net sales climbed 28% to $332 million. On a 12-month trailing basis, Cava's revenue has surpassed $1 billion, representing a major milestone for the company. The company did raise some of its projections for the fiscal year. Cava now anticipates adjusted earnings before interest, taxes, depreciation and amortization of $152 million to $159 million, up from its prior forecast of $150 million to $157 million. The company also plans to open between 64 and 68 new locations, higher than its previous outlook of between 62 and 66 restaurant openings.
NBC News
16-05-2025
- Business
- NBC News
Cava revenue beats estimates as Mediterranean chain reports double-digit same-store sales growth
Cava on Thursday reported better-than-expected sales in its latest fiscal quarter, shaking off the malaise the broader restaurant industry has felt as consumers have cut back on dining. The Mediterranean chain said its same-store sales grew 10.8% in the three months that ended April 20, lifted by traffic growth of 7.5%. Analysts surveyed by StreetAccount were projecting same-store sales growth of 10.3%. 'When we look at our consumers in the quarter, we saw an increase in premium attachment on higher priced items, like our pita chips or amazing housemade juices. We also saw that our per person average continued to increase, and then when we look at our results, there's positive traffic across all of our geographies, across all of our income cohorts, as well as the different formats of our restaurants and dayparts,' Chief Financial Officer Tricia Tolivar told CNBC. She added that diners have been trading up from fast food and down from casual-dining restaurants into Cava's bowls and pitas, a trend the company has seen for several quarters. Elsewhere in the restaurant industry, companies have been reporting very different behavior from consumers, although many companies' results did not include any time in April, when the industry's sales and traffic performance improved. Fast-casual rival Chipotle said its transactions fell 2.3% in the first quarter as consumers pulled back their spending in February, spooked by economic uncertainty. Sweetgreen reported its first quarterly same-store sales decline since it went public in 2021. McDonald's CEO Chris Kempczinski said fast-food industry data showed both low- and middle-income consumers spending less. The burger giant said U.S. same-store sales declined 3.6% for the first quarter. Despite the strong quarterly performance, Cava reiterated its same-store sales forecast, sticking with its projections of a 6% to 8% increase. The chain said last quarter that it is expecting slower growth in the back half of its fiscal 2025. The stock fell 5% in extended trading. As of Thursday's close, Cava shares have slid 11% so far this year, hurt by investor concerns over its conservative outlook for the fiscal year and the economic fallout from the Trump administration's tariffs. Here's what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG: The company reported fiscal first-quarter net income of $25.71 million, or 22 cents per share, up from $13.99 million, or 12 cents per share, a year earlier. Cava reported an income tax benefit of $10.7 million related to stock-based compensation, which boosted its earnings this quarter. Net sales climbed 28% to $332 million. On a 12-month trailing basis, Cava's revenue has surpassed $1 billion, representing a major milestone for the company. The company did raise some of its projections for the fiscal year. Cava now anticipates adjusted earnings before interest, taxes, depreciation and amortization of $152 million to $159 million, up from its prior forecast of $150 million to $157 million. The company also plans to open between 64 and 68 new locations, higher than its previous outlook of between 62 and 66 restaurant openings.
CNBC
15-05-2025
- Business
- CNBC
Stocks making the biggest moves after hours: Applied Materials, Take-Two Interactive, Cava and more
Applied Materials — Shares fell nearly 5% in extended trading. The maker of semiconductor manufacturing equipment reported $7.10 billion in revenue in its fiscal second quarter, which was slightly lower than analysts' expectations of $7.13 billion, according to LSEG. Semiconductor revenue of $5.26 billion for the quarter fell short of estimates of $5.31 billion. Take-Two Interactive Software The video game company saw a 2% decline in shares after issuing weaker than expected guidance for full-year bookings. The company said it expects between $5.9 billion and $6 billion, while StreetAccount consensus estimates sought $7.82 billion. For the fiscal first quarter, Take-Two projected bookings between $1.25 billion and $1.30 billion, versus estimates of $1.28 billion. Cava Group Shares of the Mediterranean restaurant chain fell 4%.Cava's full-year guidance for adjusted earnings before interest, taxes, depreciation, and amortization came in at $152 million to $159 million, short of the FactSet consensus call for $159.7 million. Revenue in the first quarter surpassed estimates, coming in at $332 million, versus the $327 million consensus estimate, per LSEG. Doximity The networking platform for health-care professionals saw its stock tank 25% on weak guidance. Doximity expects adjusted EBITDA to range from $71 million to $72 million, while StreetAccount consensus estimates sought $74 million. The company's full-year outlook also missed expectations.
CNBC
15-05-2025
- Business
- CNBC
Cava revenue beats estimates as Mediterranean chain reports double-digit same-store sales growth
Cava on Thursday reported better-than-expected sales in its latest fiscal quarter, shaking off the malaise the broader restaurant industry has felt as consumers cut back on dining. The Mediterranean chain said its same-store sales grew 10.8% in the three months ended April 20, lifted by traffic growth of 7.5%. Analysts surveyed by StreetAccount were projecting same-store sales growth of 10.3%. "When we look at our consumers in the quarter, we saw an increase in premium attachment on higher priced items, like our pita chips or amazing housemade juices. We also saw that our per person average continued to increase, and then when we look at our results, there's positive traffic across all of our geographies, across all of our income cohorts, as well as the different formats of our restaurants and dayparts," CFO Tricia Tolivar told CNBC. She added that diners have been trading up from fast food and down from casual-dining restaurants into Cava's bowls and pitas, a trend that the company has seen for several quarters. Elsewhere in the restaurant industry, companies have been reporting very different behavior from consumers, although many companies' results didn't include any time in April, when the industry's sales and traffic performance improved. Fast-casual rival Chipotle said its transactions fell 2.3% in the first quarter as consumers pulled back their spending in February, spooked by economic uncertainty. Sweetgreen reported its first quarterly same-store sales decline since it went public in 2021. And McDonald's CEO Chris Kempczinski said fast-food industry data showed both low- and middle-income consumers spending less; the burger giant said U.S. same-store sales declined 3.6% for the first quarter. Despite the strong quarterly performance, Cava reiterated its same-store sales forecast, sticking with its projections of a 6% to 8% increase. The chain said last quarter that it's expecting slower growth in the back half of its fiscal 2025. So far this year, Cava shares have slid 11%, hurt by investor concerns over its conservative outlook for the fiscal year and the economic fallout from the Trump administration's tariffs. Here's what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG: The company reported fiscal first-quarter net income of $25.71 million, or 22 cents per share, up from $13.99 million, or 12 cents per share, a year earlier. Cava reported an income tax benefit of $10.7 million related to stock-based compensation, which boosted its earnings this quarter. Net sales climbed 28% to $332 million. On a 12-month trailing basis, Cava's revenue has surpassed $1 billion, representing a major milestone for the company. The company did raise some of its projections for the fiscal year. Cava now anticipates adjusted earnings before interest, taxes, depreciation and amortization of $152 million to $159 million, up from its prior forecast of $150 million to $157 million. The company also plans to open between 64 and 68 new locations, higher than its previous outlook of 62 to 66 restaurant openings.
